What's behind Aston Martin's share price wobbles, Wolff links

Jonathan Noble

With Stroll's Yew Tree consortium bringing with it some financial muscle, including an injection of £260m of new capital, and shareholders approving a plan for Aston Martin's F1 works team, this should have been a win-win for everybody involved.

But in these unprecedented times of a global pandemic putting untold pressure on businesses, even those eye-watering cash figures were not enough to lift the gloom.

Against the backdrop of the company warning that, even with Stroll's input as its future executive chairman, it did not have the capital to survive the next 12 months unless it changed path and found even more cash, the stock market gave its verdict on what it all meant.

With its share price having traded around £2.20 before the General Meeting that approved the Stroll plan, news of the capital warning left investors worried. A day later it briefly crashed to 65p before rebounding above a pound the following day – although that could have been a dead-cat bounce effect.

Since then, however, things appeared to have stabilised amid signs of much less turbulence on the wider stock markets. As of Wednesday morning, Aston Martin's share price is bubbling around the 80p mark.

It is clear that these are not easy times for any car manufacturer, but it is the luxury makers who may well come under the most stress when the economy eventually recovers.

Aston Martin finds itself under the spotlight more than some others, however, because it is embarking on a new chapter right now. Plus it is putting the spotlight on itself because, at a time when some rivals may be questioning their F1 involvement, it is ramping up its presence.

Lawrence Stroll, Owner, Racing Point and Lance Stroll, Racing Point

Lawrence Stroll, Owner, Racing Point and Lance Stroll, Racing Point Glenn Dunbar / Motorsport Images

Glenn Dunbar / Motorsport Images

As part of Stroll's original investment, Aston Martin will shift its title sponsorship deal of Red Bull (believed to be worth as much as £20 million) across to Racing Point from 2021, which will lead to the team being renamed Aston Martin Racing.

Just a day after the share price tumbled, Lawrence Stoll put out a Q&A making clear that the F1 project was pushing on full steam ahead.

"A brand with the pedigree and history of Aston Martin needs to be competing at the highest level of motorsport," he said. "I think it's the most exciting thing that's happened in recent memory in Formula 1 and it's incredibly exciting for all stakeholders in the sport, especially the fans."

He added: "The global spotlight of Formula 1 is second to none and we will leverage this reach to showcase the Aston Martin brand in our key markets."

Toto Wolff, Executive Director (Business), Mercedes AMG

Toto Wolff, Executive Director (Business), Mercedes AMG Glenn Dunbar / Motorsport Images

Glenn Dunbar / Motorsport Images

He added: "I'm not going to become CEO of Aston Martin, and I'm not going to make a strategic investment there either."

But not taking a strategic investment or formal role does not preclude Wolff getting involved financially on a smaller scale.

He and Stroll are good friends and sources have indicated that a personal investment could still be on the cards. But any deal like that will not be on the scale that would be a game-changer for Aston Martin.

While any personal Wolff involvement with another car company would seem slightly unusual considering his focus on Mercedes, there would not actually be a conflict of interest, so it wouldn't impact him staying on with the German car manufacturer.

For Daimler is already a shareholder in Aston Martin, having struck a deal in 2013 to receive what was then 5% of shares (non-voting) in exchange for supplying its next generation of cars with high-performance engines and electronic components.

Daimler is now Aston Martin's largest supplier and, as confirmed in Aston Martin's latest prospectus last week, it has a veto over any future investment partners.

"The various agreements governing the supplier relationship between Daimler and Aston Martin Lagonda impose certain restrictions that have the effect of limiting the Group's ability to obtain investment from certain strategic Daimler competitors, or certain other restricted parties, without Daimler's consent," says the document.

"If certain strategic Daimler competitors acquire any interest or certain other restricted parties acquire a specified interest in the Company without Daimler's consent, either Aston Martin Lagonda or Daimler may give notice of at least three years that the principal operational agreements governing the commercial and supply arrangements between Daimler and the Group will terminate."

That effectively means should there be any extra investment plan – whether it involves Wolff or not – it could only be with Daimler's blessing.

One other suggestion recently is that former Lotus CEO Dany Bahar has also put forward an investment plan to Stroll, which would help transform the Aston Martin company.

There are rumours that one of Bahar's ideas was to bring in Chinese backers and move Aston Martin away from a focus on production cars and towards more exotic machinery.

How much of this plan is true is hard to ascertain, but Bahar has declined to comment on any potential involvement he may have, while Aston Martin too has been silent on the matter.

In a fast-changing world that is facing unprecedented challenges, it is hard for any company to be sure about what the future holds in a few weeks from now, let alone months and years.

Aston Martin's road car or F1 operations will not be immune to that, which is why it still faces some considerable hurdles in the both the short and longer term.

But for Stroll, who had business successes with a host of companies including Tommy Hilfiger and Michael Kors, the current short term headaches will not distract him from his long term ambition.

"I am committed to Formula 1 with a long-term vision and this is just a temporary pause in the journey," he said.

Aston Martin logo

Aston Martin logo Alexander Trienitz

Alexander Trienitz